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US solar industry navigates 'growing pains' as power sector leader


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US solar industry navigates 'growing pains' as power sector leader

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US Sen. Jon Ossoff (D-Ga.) speaks at the RE+ trade show held Sept. 11–14 in Las Vegas.
Source: S&P Global Commodity Insights

The US solar industry is radiating a new level of confidence, emboldened by lucrative long-term tax incentives in the landmark US clean energy law signed by President Joe Biden in August 2022.

"We're trying to cultivate some solar swagger around here," Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA), said in her opening address at the RE+ symposium and expo held Sept. 11–14 in Las Vegas. Solar installers are poised to lead annual additions of new US generating capacity in 2023, outshining natural gas, wind and other resources for a fifth consecutive year.

A photovoltaic (PV) manufacturing boom is also underway with SEIA counting 59 factory announcements since the clean energy law was passed. As with any industry in rapid ascent, however, there will be "growing pains," Hopper added. "We know that our supply chain is not yet where it needs to be, so it's critically important to look for smart solutions to mitigate any challenges that will slow our momentum down the road."

The US solar industry faces significant financial, operational and political risks as it seeks to expand its market and manufacturing footprint, executives acknowledged at the event. The ability to mitigate those risks will determine whether the industry can meet its lofty goals of supplying 30% of US electricity generation by 2030 while reaching 50 GW of annual domestic production capacity across the heart of the PV supply chain.

"Our biggest growing pains are still in front of us," Danielle Merfeld, chief technology officer at Qcells, an affiliate of South Korea's Hanwha Solutions Corp., said in an interview at the event. "The US needs to start building en masse."

Hanwha Q Cells USA Inc. is embarking upon one of the most ambitious solar manufacturing build-outs in US history, featuring a 3.3-GW crystalline silicon ingot, wafer, cell and panel complex under construction in Cartersville, Ga., and an additional 2 GW of module capacity at an existing 1.7-GW factory in Dalton, Ga.

"It's not just about going bigger, faster. It's about doing something different," Merfeld said, highlighting Qcells' multifaceted "sand to electrons" strategy that extends from solar manufacturing to home energy storage and remote-controlled virtual power plants.

'All about the capital'

US Sen. Jon Ossoff (D-Ga.), speaking at the conference, highlighted Qcells' multibillion-dollar investment and "belief in Georgia" among the early fruits of the Inflation Reduction Act (IRA). The policy is having a "profound impact," Ossoff said, citing SEIA's estimate that solar and energy storage companies combined for roughly $100 billion in private-sector investment commitments in the IRA's first year on the books.

Among those first-year announcements, solar companies committed nearly $20 billion for domestic PV manufacturing, including 85 GW of solar panel capacity, 43 GW of solar cells, and 20 GW of silicon ingots and wafers, according to the industry's primary trade group.

The next year will separate serious from speculative announcements, according to Mark Babcock, chief revenue officer at Maxeon Solar Technologies Ltd., which in August unveiled plans to build an initial 3-GW crystalline-silicon cell and module production hub in Albuquerque, NM.

"At this point, it's all about the capital," Babcock said in an interview. "Over the next year, we expect people either to announce that they're breaking ground or announce that they're not doing projects."

Maxeon is in talks with the US Energy Department's Loan Programs Office to back its New Mexico project, which is scheduled to break ground in the first quarter of 2024 and create up to 1,800 jobs.

"There is a lot to do, but it's also very exciting times," Babcock said.

3Sun USA has similar plans. A subsidiary of clean energy company Enel North America Inc., which is an affiliate of Italy's Enel SpA, 3Sun in May announced an initial 3-GW cell and panel production site in Inola, Okla.

'We're targeting end of the year, beginning of next year to start construction," 3Sun USA CEO Giovanni Bertolino said.

Although the IRA's market and manufacturing incentives are critical tools to helping solar manufacturers scale up, Bertolino sees an emerging global glut of solar panel production capacity, fueled by Chinese manufacturers, as a big risk.

"At a global level, we're seeing an overcapacity, which is challenging the ability of all these projects to raise financing," the CEO said. That makes the IRA manufacturing incentives, coupled with trade protections, all the more important to enabling the industry to raise the capital needed to scale up, Bertolino added.

"That's the message everybody is delivering to decision-makers," Bertolino said. "The next few months will be critical to make sure that indeed the circle is closed."

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Protecting investments

The US solar industry's strategy for protecting the IRA's energy provisions from political attacks, such as the unsuccessful Republican bid to slash support as part of debt ceiling negotiations, includes highlighting the economic impact of investments across the country.

"The IRA is expected to lead to nearly half a million American solar and storage jobs and help the industry invest over half a trillion dollars in the economy over the next decade," according to a letter to members of Congress that SEIA released during RE+. Hundreds of companies signed the letter, which calls on lawmakers to "oppose efforts to revoke or weaken IRA clean energy policies."

"The growth of solar is bipartisan," said Eric Goodwin, the director of business development at OMCO Solar.

The solar tracker and mounting system specialist announced a new factory in Alabama at the show. The plant, OMCO's second in the state, will be near First Solar Inc.'s $1.1 billion thin-film module manufacturing facility under construction in Lawrence County, Ala. OMCO will supply First Solar with steel backrails for its modules.

"There are lawmakers in our government that don't want this to happen," Goodwin said in an interview. "Those [investments] are powerful, and they can't be easily ignored."

Keeping options open

Mark Noyes, CEO of RWE Clean Energy LLC, a subsidiary of Germany's RWE AG that owns and operates solar, wind and battery storage facilities around the US, is not too concerned about the political risks.

"There is risk, there's no question," Noyes said. "But I'm not as concerned about it as much as I used to be."

On the supply chain front, RWE plans to prioritize US-made panels and parts, which can enable asset owners to qualify for a 10% bonus tax incentive on top of a 30% investment tax credit.

"It is the way to go ... there's no question," Noyes said. "It would be best if we could do it all that way. To the extent that we can't, Southeast Asia will be, in my opinion, a viable option."

Cambodia, Malaysia, Thailand and Vietnam together made up 80.3% of US solar panel imports in the second quarter of 2023 and shipped nearly 20 GW into the country in the first half of the year, according to the S&P Global Market Intelligence Global Trade Analytics Suite.

But some suppliers could be subject to import tariffs after the US Commerce Department in August determined that certain Chinese PV producers were evading tariffs on imports from China by routing their supply chains through Southeast Asian factories for "minor processing." Duty collections are set to begin in June 2024, though suppliers can enter a certification process to show they are not circumventing tariffs and avoid them.

"It's only math to figure out the [incentive] value of the domestic product," Noyes said. "If the price of the equipment is lower than that math, you'll bring the Southeast Asian panels into the US."

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